Kerogen Sells UK Zennor to NEO
Private equity fund manager Kerogen Capital has agreed terms with NEO and Norwegian backer HitecVision for the sale of Zennor Petroleum for up to $625mn, including deferred and contingent payments and subject to customary regulatory approvals, it said March 8.
Zennor was set up in 2015 along with several other companies looking to take advantage of low oil prices. Headed by Martin Rowe, a former Arco North Sea exploration executive, it bought First Oil.
It has assets in and around the Britannia field and also the Eastern Trough Area Project where NEO now has a stake following its acquisition last month of ExxonMobil's UK North Sea assets. Last August it bought some assets in the UK from Total; and with Italian Eni it is partner in Var Energi operating in Norway.
Zennor won licences in offshore rounds and now has a portfolio of about 40mn barrels of oil equivalent (boe) 2P reserves and more than 90mn boe of 2C resources.
These are comprised of non-operated interests in the Mungo and Monan, Britannia, Bacchus and Cormorant East producing fields; a 100% operated interest in its flagship Finlaggan development project; and interests in several near-field discoveries. Zennor’s net production is expected to rise from 3,500 boe/d now to over 20,000 boe/d in Q4 2021 when Finlaggan is onstream. It is offsetting the carbon related to its share of production through forestry and other schemes.
Kerogen Capital and Zennor have built a "portfolio of long-life, high-margin assets with significant further growth potential," Kerogen said. "With the Finlaggan development nearly complete, we believe this is an opportune time to monetise our investment and realise an attractive outcome for our investors, while leaving room for NEO to deliver the next phase of portfolio growth in synergy with their existing assets.”
Finlaggan gas has been delayed a year by work on the Forties pipeline system, which also pushed up its financing costs.
Rowe said Kerogen's support in strategic, financial and technical matters had been instrumental to Zennor's success. The portfolio of high-quality assets was the reason for the transaction, and the integration of the Zennor team into the NEO business at completion was proof of its value, he said.